The VAT place of supply rules for supplies of electronic services are to change from 1 January 2015. The change affects business to customer (B2C) supplies within the EU of the following: telecommunications services, broadcasting services and e-services.
Registration for the Mini One Stop Shop is now open with effect from 20th October, and businesses are encouraged to register in their own EU Member State in time for the change to the new system.
From 1 January 2015, the place of supply for these services will be the country where the customer belongs. (Such supplies are currently taxed in the country in which the business is established.) This means that EU businesses supplying electronic services to non-business customers in other EU member states will have to charge and account for the VAT according to the local VAT rules of the customer’s member state.
Affected businesses will need to register for VAT in each EU member state in which they supply such services. Alternatively they can register for the Mini One Stop Shop (MOSS) system in their own Member State which will allow for sales and VAT compliance throughout the EU. This will enable an affected business to submit one quarterly return and payment to the tax authorities in their own country to account for the foreign VAT charged to its customers in all other EU member states.
The UK tax authorities (HMRC) have produced a helpful Question and Answer information sheet covering issues which will arise because of these changes. The procedure is common throughout the EU in the majority of situations, but of course readers must check first with their own tax authorities before taking any action.
